Use of Level-of-Service-Based Water Pricing to Sustain Irrigated Agriculture: A Case of Modernized Irrigation System in Vietnam

Abstract

Water is an important input for irrigated agriculture. However, the irrigation sector, especially in developing countries, often faces pressure to secure water for production activities and maintain irrigation services. To sustain the supply and delivery of water in irrigation, not only should efficient use of water resources be promoted, but the balance between the cost and revenue from water supply must be sustained. In most cases, the appropriate setting and application of water pricing is crucial to achieving these objectives. In this paper, the use of level-of-service-based water pricing is described and illustrated with a case of a modernized irrigation system in a central highland province of Vietnam. The results from this study show that: (i) modernization of irrigation systems increases service levels and farmers have more choices for selecting services provided; (ii) water rates can be reasonably calculated with respect to the level of irrigation services provided; and (iii) farmers are more likely to select an acceptable level of service for a reasonable water price instead of choosing to pay more for a higher quality of service. This paper highlights the importance of policies which support the modernization of irrigation systems and pursuing level-of-service-based water pricing to promote more sustainable irrigation development in developing countries.